Doing Business in Russia: Note on Negotiating in the "Wild East"

Abstract

Based on an MBA's experience, this anecdotal note explores cross-border negotiations between U.S. executives and Russian counterparts. The first section guides the reader through general aspects of the Russian market. Next follows a characterization of the Russian negotiating psyche. Finally, the note describes common elements of the Russian negotiating style and gives advice on concluding successful deals in current-day Russia.

More from the Author

The Best Alternative to a Negotiated Agreement (“BATNA”) concept in negotiation has proven to be immensely useful. In tandem with its value in practice, BATNA has become a wildly successful acronym (with more than 14 million Google results). But the initial characterization of this concept in Getting to Yes (Fisher, Ury, and Patton 1991) as well as many later interpretations can be problematic, limiting, and even misleading in several ways, which this article analyzes and illustrates. First, early characterizations could be easily read to imply that one’s BATNA could not itself be a negotiated agreement. Second, and more seriously, common descriptions of one’s BATNA as the “best outside option, independent of the other side” needlessly limit its applicability, especially in the many bargaining relationships in which BATNAs are inherently interdependent. Third, BATNAs are often mistakenly described mainly as “last resorts” relevant only in case of impasse or “if the other side is more powerful.” Other uses of the term “BATNA” such as the common question, “How do I negotiate if I have no BATNA?” reflect misconceptions. Although savvy negotiators and analysts generally avoid these pitfalls, the less sophisticated can go astray. This article offers robust correctives to these misimpressions and relates these to three different kinds of “no” in negotiation: a “tactical no,” a “reset no” that permits away-from-the-table moves to favorably alter the underlying setup, and a “final no.”

The best alternative to a negotiated agreement (“BATNA”) concept in negotiation has proven to be immensely useful. In tandem with its value in practice, BATNA has become a wildly successful acronym (with more than 14 million Google results). But the initial characterization of this concept in Getting to Yes (Fisher, Ury, and Patton 1991) as well as many later interpretations can be problematic, limiting, and even misleading in several ways, which this article analyzes and illustrates. First, early characterizations could be easily read to imply that one’s BATNA could not itself be a negotiated agreement. Second, and more seriously, common descriptions of one’s BATNA as the “best outside option, independent of the other side” needlessly limit its applicability, especially in the many bargaining relationships in which BATNAs are inherently interdependent. Third, BATNAs are often mistakenly described mainly as “last resorts” relevant only in case of impasse or “if the other side is more powerful.” Other uses of the term “BATNA” such as the common question, “How do I negotiate if I have no BATNA?” reflect misconceptions. Although savvy negotiators and analysts generally avoid these pitfalls, the less sophisticated can go astray. This article offers robust correctives to these misimpressions and relates these to three different kinds of “no” in negotiation: a “tactical no,” a “re-set no” that permits away-from-the-table moves to favorably alter the underlying setup, and a “final no.”

President Richard M. Nixon was elected in 1968 with the widespread expectation that he would bring about an end to the costly and unpopular war in Vietnam. The task largely fell to National Security Adviser Henry Kissinger. When the negotiations began, North Vietnam appeared to have a winning hand with time on its side. To induce agreement from North Vietnam on acceptable terms, Kissinger orchestrated a complex negotiation campaign with multiple fronts: North Vietnam, the U.S. public and Congress, China, the USSR, West Germany, and South Vietnam. Kissinger’s efforts culminated in the signing of the 1973 Paris Peace Accords, which held for about two years before collapsing in the wake of Watergate. The account in this working paper carefully describes—but does not analyze nor draw lessons from—core features of these challenging negotiations. Forthcoming papers will provide analysis and derive general insights from this negotiation campaign.